EU urges banks to lend to businesses in face of coronavirus

Paris — The EU is urging banks to lend to businesses as the coronavirus outbreak is bound to hit the continent’s economy.

“Banks will have to lend what’s required during this period, with perhaps restrictions a bit less stringent, including their own ratios,” so that small- and medium-sized enterprises (SMEs) in the EU can stay afloat, Thierry Breton, internal market commissioner for the bloc, said on Sunday.

Though it is “too early” to assess the virus’s economic impact, Breton said SMEs face cash-flow problems. “My immediate concern is making sure that SMEs can overcome” this situation, he said, citing the hit to the tourism industry in Europe, which has been losing €1bn a month in revenue due to the drop in Chinese visitors over the past two months.

Breton said the European Central Bank has little room for manoeuvre regarding its capacity to lower interest rates compared with the US Federal Reserve.

He reiterated that Italy’s extraordinary €7.5bn stimulus measures to cushion the impact of the outbreak will not be factored in when the EU assesses the country’s compliance with its fiscal rules.

Italy unveiled drastic measures on Sunday to restrict the spread of the deadly virus, which has struck more than 5,800 people so far and claimed the lives of 233. Europe’s fourth-biggest economy is dramatically restricting movement and activity for a quarter of its population in the economic powerhouse that is the region around Milan.

Bloomberg